Murdock v. Santander Consumer U.S. Inc., Case No: 2:15-cv-268-FtM-38CM

Decision Date23 June 2016
Docket NumberCase No: 2:15-cv-268-FtM-38CM
CourtU.S. District Court — Middle District of Florida
PartiesDENISE MURDOCK and MYRTLE MURDOCK, Plaintiffs, v. SANTANDER CONSUMER USA INC., PATRICK K. WILLIS COMPANY INC. D/B/A AMERICAN RECOVERY SERVICE and ABS RECOVERY, INC., Defendants.
REPORT AND RECOMMENDATION1

This matter comes before the Court upon review of Defendant, Santander Consumer USA Inc.'s Motion to Dismiss Plaintiff's Second Amended Complaint and Motion to Compel Arbitration (Doc. 52)2 filed on January 19, 2016. On February 25, 2016, Plaintiffs filed their response in opposition. Doc. 64. With leave of Court, on March 9, 2016, Defendant Santander Consumer USA Inc. ("Santander") filed a reply to Plaintiffs' response. Doc. 67. The motion, therefore, is ripe for review.

I. Background and Arguments

Plaintiffs Myrtle Murdock ("Myrtle") and Denise Murdock ("Denise") brought this action in the Circuit Court for the Twentieth Judicial Circuit in and for Lee County, Florida for violations of the Florida Consumer Collection Practices Act ("FCCPA"), the Telephone Consumer Protection Act ("TCPA"), wrongful repossession, negligence, trespass to chattel, and conversion. See Doc. 2. Santander timely removed the case pursuant to 28 U.S.C. § 1331, invoking this Court's federal question jurisdiction related to the TCPA claim. Doc. 1. Since removal, the complaint has been amended twice, leaving the Second Amended Complaint and Demand for Jury Trial as the operative complaint. Doc. 49. The operative complaint alleges the same causes of action against Santander and also included counts for wrongful repossession, negligence, trespass to chattel, and conversion against two repossession companies, Patrick K. Willis Company Inc. doing business as American Recovery Service ("PKW") and ABS Recovery, Inc. ("ABS"). Id.

The factual allegations in support of the operative complaint arise out of repossession of a vehicle that Myrtle purchased and financed through a vehicle loan by HSBC Bank ("HSBC"). Doc. 49 ¶¶ 8, 9. Denise was an authorized driver of the vehicle and, after Myrtle and Santander entered into the loan agreement, took possession of the vehicle, had exclusive use of the vehicle, and made payments under the loan agreement directly to the lender. Id. ¶¶ 9, 10. At some point thereafter, "HSBC sold, assigned, or otherwise transferred the account associated with [the loan] agreement to Santander." Id. ¶ 11. When this occurred, Santander allegedly requested an "an inexplicable 'late fee'" from Denise, which she disputed to no avail. Id. ¶ 12. Due to this late fee and a missed payment from Denise, Santander requested the services of PKW to repossess the vehicle, who then hired ABS to handle the actual repossession, which occurred in November 2012. Id. ¶¶ 13-16. After paying the full amounts requested by Santander and picking up the vehicle, Denise noticed that the vehicle was damaged while in ABS's custody. Id. ¶¶ 16, 17. After this incident, Santander began repeatedly calling Denise to collect amounts due on the vehicle. Id. ¶ 18.

On or about September 2013, the operative complaint further alleges, Santander called Denise and informed her that she was again in arrears. Id. ¶ 21. To avoid repossession, Denise paid the amounts requested. Id. Despite her payment, Santander again retained PKW to repossess the vehicle, who then retained ABS to actually take the vehicle. Id. ¶ 22. The vehicle was never returned, and Plaintiffs believe that it was sold. Id.

Santander has filed the instant motion requesting that Plaintiffs' claims as against Santander be dismissed and submitted to arbitration. Doc. 52. In the alternative, Santander requests that the action be stayed pending arbitration on the merits. Id. at 10. Attached to its motion, Santander has included a "Loan Repayment and Security Agreement" that was entered into by Myrtle Murdock and HSBC. Doc. 52-1. With respect to identification of the parties bound by the agreement, the agreement provides:

In this Agreement, "we", "us", and "our" refer to the Creditor, HSBC Auto Finance Inc., and its successors and assigns: and "your" refer to each Borrower who signs this Loan Repayment and Security Agreement (the "Agreement") and each other person or legal entity (guarantors, endorsers, and sureties) who agrees to pay this Loan.

Doc. 52-1 at 1 (emphasis added). Further below on the first page of the agreement, the following clause appears:

THIS CONTRACT CONTAINS AN ARBITRATION PROVISION WHICH AFFECTS YOUR RIGHTS. YOU MAY OPT OUT OF ARBITRATION BY TAKING THE ACTION DETAILED IN THE ARBITRATION PROVISION WITHIN 30 DAYS OF THE SIGNING OF THIS AGREEMENT.

Id. On page 3 of the agreement, there is an arbitration provision which states, in relevant part:

Any claim, dispute or controversy between you and HSBC Auto Finances Inc. (as specifically defined below for purposes of this Arbitration Provision), whether in contract or tort (intentional or otherwise), whether pre-existing, present or future, and including constitutional, statutory, common law, regulatory, and equitable claims in any way arising from or relating to this Agreement or the relationships which result from this Agreement (including, without limitation, any ancillary products financed and/or purchased in connection with this Loan) and, including, except as provided below, the validity, enforceability or scope of this Arbitration provision or any part thereof, including without limitation, the issue whether any particular claim, dispute, or controversy must be submitted to arbitration (collectively the "Claim"), shall be resolved, upon the election of either you or HSBC, by binding arbitration pursuant to this Arbitration Provision and the applicable rules of the American Bar Association or the National Arbitration Forum in effect at the time the Claim is filed.

Id. at 4. On the last page, the agreement provides that the agreement is governed by Florida law. Id. at 5.

Santander contends that the agreement is valid and enforceable. Doc. 52 at 2-7. According to Santander, because the agreement contains a delegation clause, leaving the question of arbitrability to the arbitrator, the inquiry should stop there and this matter must be submitted to arbitration. Id. at 6. Santander argues that because it is an assignee, it is undoubtedly a party to the arbitration agreement and has standing to enforce it. Docs. 52 at 3-4; 67. Santander further argues that although Denise was not a party to the agreement, the agreement nonetheless applies to her under Florida law. Doc. 52 at 8-9.

In their response, Plaintiffs argue that Santander never signed the agreement and therefore lacks standing to enforce it. Doc. 64 at 2-5. Plaintiffs dispute that Denise, a nonsignatory to the agreement, can be compelled to arbitrate her claims. Id. at 10-11. Plaintiffs further argue that by invoking the judicial process by way of removing this action to federal court, Santander has waived its right to arbitrate. Id. at 8-10.

The Court finds Myrtle entered into a valid arbitration agreement that Santander has standing to enforce. The Court also finds Santander did not waive its right to arbitration and, pursuant to Florida law, the arbitration provision is broad enough to encompass Denise's claims. Accordingly, the Court respectfully recommends that the motion be granted, and the case be stayed during the pendency of the arbitration.

II. Discussion

Under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA "places arbitration agreements on an equal footing with other contracts, and requires courts to enforce them according to their terms." Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 63 (2010) (internal citations omitted). As provided by the FAA, any party aggrieved by the failure or refusal of another to arbitrate under a written agreement, may petition the court to direct that arbitration proceed. 9 U.S.C. § 4. The Supreme Court's precedent establishes a "healthy regard for the federal policy favoring arbitration," resolving any doubts as to the scope of arbitrable issues in favor of arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983). In ruling on a motion to compel arbitration, courts consider three factors: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitrate was waived. Florida Farm Bureau Ins. Cos. v. Pulte Home Corp., Inc., No. 8:04-cv-2357-T-EAJ, 2005 WL 1345779, at *3 (M.D. Fla. June 6, 2005).

1. Whether a valid arbitration agreement exists between Santander and Myrtle

State law governs whether an enforceable agreement to arbitrate exists. Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1368 (11th Cir. 2005). "Federal policy favoring arbitration, however, is taken into consideration even in applying ordinary state law." Id. Under Florida law, a contract, like the agreement at issue here, is enforceable if there was an "offer, acceptance, consideration and sufficient specification of essential terms." Jones v. Sallie Mae, Inc., No. 3:13-cv-837-J-99MMH-MCR, 2013 WL 6283483, at *4 (M.D. Fla. Dec. 4, 2013) (internal citations and quotations omitted). Plaintiffs take no issue with any of these elements to the agreement with respect to Myrtle. Rather, Plaintiffs argue that the agreement is not valid or enforceable because Santander has failed to show it has standing to enforce the agreement. Doc. 64 at 2-6. It is undisputed that Santander is not a signatory to the agreement.

State law governs the issue of "whether a contract may be enforced by or against a nonparty." Kong v. Allied Prof'l Ins. Co., 750 F.3d 1295, 1302 (11th Cir. 2014). Pursuant to Florida law, a contracting party's assignee is bound by a contract's arbitration provision. Id. ...

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